5 Stocks Under $10 Worth Buying

A small-priced stock can do big things if you can stomach the risk.

Mar 17, 2014 at 5:15PM

If you've got $10, I have some stock ideas for you.

I've been singling out attractive opportunities in low-priced stocks since my original "5 Stocks Under $10" column 13 years ago, and I've seen plenty of stocks with pocket-change prices generate incredible gains.

There are risks, and they are readily apparent, given recent volatility. There are often good reasons for stocks to be ignored or beaten-down. However, a market rally can work wonders for the unloved with positive catalysts in their pockets.

Let's go over my five picks from March 2009 -- when low-priced stocks bottomed out -- to prove my point.

 

March 14, 2014

March 13, 2009

Gain

Sirius XM Radio

$3.44

$0.198

1,637%

Bare Escentuals*

$18.20

$3.66

397%

Focus Media*

$27.50

$5.74

379%

Geron

$1.83

$4.36

(58%)

Ford 

$15.08

$2.19

589%

*Bare Escentuals was acquired for $18.20 a share in 2010. Focus Media was acquired for $27.50 a share in 2013.

The average gain of 589% in five years is pretty remarkable. Yes, it was five years ago when the market was bottoming out, but that still blows away every major market index in that time.

Let's go over this month's picks.

Groupon (NASDAQ:GRPN) -- $8.36
The daily-deals leader seemed to be trading in the double digits for good last month until a poorly received quarterly report sent it plunging back into the single digits.

But things aren't that bad at Groupon.

Acquisition integration costs have eaten at the company's bottom line, but we're looking at a niche leader that's growing revenue at a healthy clip. Analysts see another year of profitability, with revenue climbing 23% in 2014. Packing $1.2 billion in cash and equivalents on its balance sheet also comes in handy. Groupon may have been ludicrously priced when it went public at $20 a couple of years ago, but now it's trading at more than 50% off -- the kind of discount that usually draws Groupon users.

Allied Nevada Gold (NYSEMKT:ANVGQ) -- $6.39
With precious-metal prices heading higher, it's time to consider having some exposure to the mining industry. Allied Nevada is a gold and silver miner that's on a roll, even before we consider the recent uptick in selling prices.

Allied closed out last year with sales of gold and silver up 59% and 23%, respectively. It sold 858,073 ounces of silver and a record 181,941 ounces of gold by lowering its mining costs per ounce during the period. It expects to continue to ramp up production this year on a cost-effective basis, and when you consider that prices have been inching higher this year, we should see Allied Nevada Gold's profitability explode.

Frontier Communications (NASDAQ:FTR) -- $4.99
Chasing high yields is hazardous in the realm of low-priced stocks, but there seems to be some stability to Frontier's 8% yield.

Yes, it's a telecom toiling away in underserved rural markets, and these days a lot of people are kissing their landlines goodbye. However, Frontier has done a good job of replacing that revenue with higher-paying broadband accounts. 

Revenue in its latest quarter didn't impress, dipping slightly to $1.18 billion. However, its adjusted EPS of $0.07 was ahead of both what it posted last year and what analysts were expecting this time around. Improving profitability is one way to keep those hefty quarterly dividend checks coming.   

JetBlue (NASDAQ:JBLU) -- $8.68
You have to go all the way back to 2007 to find the last time this low-cost airline was trading in the double digits. Investors have historically been bludgeoned for buying into the airlines industry, but this is actually a good time to fly in to a sector where consolidation and an improving global economy have been firming up airfares.

Analysts see JetBlue's revenue and EPS climbing 10% and 35%, respectively, this year. Priced at a reasonable 12 times this year's projected profitability, JetBlue offers a compelling play on one of the few air carriers that generally get rave reviews from customers for its on-board amenities.  

Sirius XM Radio (NASDAQ:SIRI) -- $3.44
The only game in town when it comes to satellite radio was the biggest winner of this month's column five years ago, but it still offers plenty of upside now that it won't be taken over by its majority stakeholder. 

Sirius XM has been growing its subscriber rolls and milking more revenue from each listener. These may be challenging times with so many free or nearly free wireless alternatives, but Sirius XM's unmatched content and lucrative relationships with all of the leading automakers can't be dismissed. With improving margins and clear paths to expand its offerings, Sirius XM should continue to beat the market through the next five years.

Five for the road
These five stocks aren't trading in the single digits by accident. If I'm right about the catalysts, though, they may not be trading in the single digits for too much longer.

Finding promising stocks while they're still cutting their baby teeth is at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are roughly a half dozen active stock recommendations in the growth stock research service trading for less than $10 at the moment. Check those out, and I'll be back with more on the third Monday of next month. 

Six more stocks to buy now
They said it couldn't be done. But David Gardner has proved them wrong time and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, one of his favorite stocks recently became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his six carefully chosen picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Rick Munarriz owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers